# Local Influences and Return Chasing: Entering a New Era in Emerging Equity Markets

- Link: https://www.thailand-business-news.com/markets/329573-local-influences-and-return-chasing-entering-a-new-era-in-emerging-equity-markets
- Published: 2026-09-27T11:15:15+07:00
- Author: News Desk

**This paper examines a shift in global equity flows, highlighting that local factors
now dominate over global ones in emerging markets, driven by investor sensitivity
to local returns post-COVID.**

### Structural Shifts in Global Financial Flows

The question of whether the global financial cycle still predominantly influences
capital flows to emerging markets is explored in this insightful working paper. 
Utilizing detailed, investor-level data, the authors investigate a notable shift
in the drivers of global equity flows over recent years. With the aid of a dynamic
factor model, the research dissects these flows into global, or “push,” factors 
and country-specific, or “pull,” factors. Historically, global elements had a commanding
influence; however, the paper reveals that local, country-specific factors have 
now taken precedence in driving capital allocations, especially in the wake of the
COVID-19 pandemic. This recalibration illustrates a renewed investor focus on local
excess returns, effectively reconnecting capital flows with domestic price discovery
dynamics.

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### The Rise of Local Factors in Investment Decisions

In the analysis presented, the authors showcase how local projections underscore
the evolution of active return chasing. This trend indicates investors’ growing 
responsiveness to local market conditions and their renewed focus on local excess
returns. These findings suggest a marked shift towards a more nuanced understanding
of regional markets, where domestic factors now exert more influence on investment
decisions than overarching global trends. This local emphasis is particularly pronounced
in the post-pandemic landscape, where investors are keen on engaging in markets 
with robust local price discovery mechanisms.

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### Collaboration Among Leading Economists

The working paper is a collaborative effort involving Jongrim Ha, a Senior Economist
at the ASEAN+3 Macroeconomic Research Office (AMRO); Daisoon Kim, an Assistant Professor
at North Carolina State University; and Inhwan So, an Assistant Professor at Hongik
University. These experts bring together a wealth of academic and practical expertise,
providing a comprehensive examination of capital flow dynamics in emerging markets.
Their joint research offers valuable insights into how investor behaviors shift 
in response to changes in global and local market conditions, shedding light on 
the intricate balance between global financial cycles and country-specific investment
drivers.

Source: [Local Factors and Return Chasing: A New Phase in Emerging Equity Markets – ASEAN+3 Macroeconomic Research Office ](https://www.amro-asia.org/local-factors-and-return-chasing-a-new-phase-in-emerging-equity-markets)